| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
December 2025 represented a transition month for hedge funds, marking the beginning of what managers describe as a less starry-eyed, more selective era. The Fed's 25bps rate cut on December 10 and announcement of Treasury bill purchases for liquidity management created supportive but jittery conditions. Markets experienced the familiar challenge of concentrated equity leadership, where small wobbles in bellwether stocks could trigger industry-wide de-risking. AI remained the dominant theme but shifted from breakthrough narrative to balance sheet scrutiny, with infrastructure plays preferred over platform exposure. Multi-strat platforms broadened return engines while equity long/short managers tightened underwriting and improved pair trades. Biotech paused after strong gains, energy transition themes faced rotation pressure, and momentum strategies required tighter crowding controls. Credit maintained carry-first positioning with growing tail risk respect. Looking ahead to 2026, success will favor managers who can diversify beyond single themes, as policy easing proceeds cautiously and leadership concentration persists. The environment rewards selective risk-taking over broad beta exposure.
December 2025 marked the start of a more selective, less starry-eyed era for hedge funds, where concentrated leadership and crowding concerns dominated amid supportive but jittery market conditions driven by Fed easing and liquidity management.
Going into 2026, if policy is easing but not overly swift, and leadership is still concentrated, the new year will reward managers who can find returns in more places than one theme. The winners will be platforms that can keep diversification real and managers who can find returns in more places than one theme.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 6 2026 | 2025 Q4 | AGG, AVGO, CWB, HYG, IBB, LQD, ORCL, XBI, XLE, XLF, XLK, XLU, XLV, XLY | AI, Crowding, Fed policy, Hedge Funds, liquidity, Long/Short, Macro, Multi-Strat | - | AI remained the loudest theme but tone shifted from breakthrough to balance sheet. The market's new habit of asking show me the cash flow reinforced… |
| Oct 15 2025 | 2025 Q3 | - | Artificial Intelligence, Correlation, Hedge Funds, momentum, volatility | - | The hedge fund sector entered Q4 with high exposures and correlations to the S&P 500, driven by crowded momentum and AI trades. Managers trimmed megacap… |
| Jun 30 2025 | 2025 Q2 | - | Alternatives, dispersion, diversification, Hedge Funds, manager selection | - | The commentary focuses on hedge fund and private market strategies as diversifiers amid equity concentration and macro uncertainty. Management highlights dispersion, manager selection, and strategy… |
| Mar 17 2025 | 2025 Q1 | - | - | - | - |
| Dec 31 2024 | 2024 Q4 | - | - | - | - |
| Sep 30 2024 | 2024 Q3 | - | - | - | - |
| Aug 15 2024 | 2024 Q2 | - | - | - | - |
| May 1 2024 | 2024 Q1 | - | - | - | - |
| Jan 31 2024 | 2023 Q4 | - | - | - | - |
| Aug 14 2023 | 2023 Q2 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
BiotechnologyBiotech delivered its best quarter in five years, benefiting from improving interest rates, easing regulation enabling more M&A activity, and excitement around AI's promise in drug discovery. The portfolio nearly doubled its biotech exposure during the quarter as more opportunities presented themselves in this improving environment. |
Drug Discovery M&A Interest Rates Regulation Pharmaceuticals | |
Energy TransitionThe portfolio maintains significant exposure to electrification themes through companies like Bloom Energy, which provides clean, reliable power solutions for AI data centers. The energy transition represents a structural opportunity as companies race to build power infrastructure to support growing electricity demands from AI workloads. |
Electrification Clean Energy Power Generation Fuel Cells Grid Infrastructure | |
LiquidityManager extensively discusses liquidity challenges in African frontier markets, explaining how tight ownership structures and limited foreign participation restrict trading volumes. Notes that liquidity varies cyclically and structurally, with potential improvement expected as bull market develops and more investor categories participate. |
Trading Volumes Participation Structural Cyclical | |
Momentum2025 was characterized by extreme momentum dynamics with capital flowing into immediate winners while perceived losers saw unprecedented pressure. Market leadership concentrated in lower-quality, speculative, and cyclically sensitive stocks. The momentum trade has been exceptionally profitable short-term but timing the inevitable reversal remains challenging. |
Cyclical Speculation Leadership Volatility Reversal | |
RatesFederal Reserve resumed rate-cutting cycle with first cut since December 2024, signaling resumption of easing. Expected three cuts of 25bps between now and first quarter 2026 as Fed responds to signs of weakness in US labor market. |
Fed Monetary Policy Labor Market Easing Liquidity | |
| 2025 Q3 |
Hedge Funds |
|
VolatilityManager expects higher volatility in 2026 relative to the past decade, with suppressed volatility historically preceding sharp sell-offs. They view volatility as creating opportunities for disciplined long-term investors and maintain hedging positions to protect against drawdowns. |
Risk Hedging Drawdowns Opportunity Market Cycles | |
| 2025 Q2 |
Alternatives |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| AVGO | During the quarter, we initiated a below-average weight position in leading semiconductor and infrastructure software company Broadcom. Broadcom's ongoing transformation from a provider of custom ASICs to a full rack-scale solutions vendor, including scale-up networking, marks a significant improvement in its strategic positioning compared to earlier in the year. This strategic evolution has been validated by recent product launches, such as the Scale-up Ethernet solution, and committed orders from major customers like Anthropic. |
| IBB | the SPDR S&P Biotech ETF (XBI) and iShares Nasdaq Biotechnology ETF (IBB) also experienced a depressed month as they posted 1.00% and 2.91% respectively, although both remain up YTD at 35.39% and 27.65%, respectively |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
| XBI | the biotech ETF (SPDR S&P Biotech- XBI) is making a new four year high |
| XLE | Large-cap integrated oil companies held up better: the XLE ETF fell only about 1%. |
| XLK | The Technology Sector SPDR (XLK) hit 0.60% in December (with a YTD of 23.83%) as markets oscillated between AI is the future and yes, but what's the bill? |
| XLV | The Health Care Sector SPDR (XLV) was down 1.81% in December |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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